Strategy Alliances

Chapter 14

Entry Strategy and Strategic Alliances

/ Questions

1. (p. 488) The long-run benefits of doing business in a country are a function of factors such as the size of the market, the present wealth of consumers in that market and the likely future wealth of customers.

Difficulty: Medium

2. (p. 489) The costs and risks associated with doing business in a foreign country are typically high in an economically advanced and politically stable democratic nation.

Difficulty: Easy

3. (p. 489) First-mover advantages are the advantages associated with entering a market early.

Difficulty: Easy

4. (p. 489) Costs that an early entrant has to bear that a later entrant can avoid are known as first-mover costs.

Difficulty: Medium

5. (p. 491) Large strategic commitments limit strategic flexibility.

Difficulty: Medium

6. (p. 492) A small-scale entrant is more likely than a large-scale entrant to capture first-mover advantages associated with demand preemption, scale economies and switching costs.

Difficulty: Medium

7. (p. 492) Small-scale entry allows a firm to learn about a foreign market while limiting the firm's exposure to that market.

Difficulty: Medium

8. (p. 493) Exporting is advantageous because it avoids the cost of establishing manufacturing operations in the host country and because it may help a firm achieve experience curve and location economies.

Difficulty: Medium

9. (p. 493) Exporting may not be appropriate if lower-cost locations for manufacturing the product can be found abroad.

Difficulty: Easy

10. (p. 495) In a turnkey project, the contractor agrees to handle every detail of the project for a foreign client.

Difficulty: Easy

11. (p. 496) An advantage of turnkey projects is that the firm that enters into a turnkey deal will have no long-term interest in the foreign country....